TORONTO — An overwhelming majority of workers at Chrysler Canada have accepted a labour concession deal reached between their union and the beleaguered automaker that will save the company $240 million a year in hopes of protecting their jobs.
The deal was approved by 87 per cent of the thousands who turned out in Toronto, Mississauga, Ont. and Windsor, Ont. to vote over the weekend.
Canadian Auto Workers president Ken Lewenza announced the agreement late Friday night and union members quickly showed their support, despite some major concessions that were made to seal the deal.
The agreement finds cost savings totalling $19 an hour through cuts to workers’ benefits but maintains base wages.
“Our members understand better than anyone the current turmoil of the domestic auto industry,” Lewenza said in a release.
“The high acceptance of this agreement is a recognition that although workers did not cause this crisis, we all have an interest in maintaining good jobs and ensuring the auto industry remains central to the overall Canadian economy.”
Meanwhile, in Detroit, the United Auto Workers said Sunday it has also reached a concession agreement with Chrysler, Fiat and the U.S. government.
The CAW agreement reduces paid relief time, cuts some supplementary unemployment benefits, increases prescription drug fees, eliminates semi-private hospital coverage and gets rid of the employee car purchase and tuition rebate programs, among other things.
The salaries of new workers will also increase more slowly than they do currently, and more room will be made for part-time and contract workers in Chrysler plants.
Chrysler said it “deeply appreciated” the union’s efforts to cut its labour costs to a competitive level.
Those efforts are central to the company putting a strong, viable restructuring plan forward.
It has to come up with such a plan to get bailout loans from the federal and Ontario governments.
Michael Bryant, the province’s minister of economic development, commended the ratification.
“Tough negotiations, tough times, and a tough but right decision by workers totally committed to Chrysler’s future,” he said in a statement.
“Great credit to Ken Lewenza for his leadership, and to all CAW members. We can now look to the future with some hope as the company works towards making itself viable.”
The concessions workers accepted are in addition to cuts already agreed to with General Motors in an deal reached last month.
That agreement freezes wages until 2012, reduces paid time off by 40 hours per year, scraps an annual $1,700 bonus, cuts company contributions to union-sponsored programs and requires CAW members to contribute $30 a month to their health benefits.
Breaking from the pattern set with GM is a substantial departure for the CAW, which usually negotiates similar deals between all three of the Detroit-based automakers.
The company now has until the end of the month to negotiate a partnership with Italian automaker Fiat and to reach deals with its U.S. workers, bondholders and other stakeholders in order to receive long-term bailout loans from governments in Canada and the U.S.
Without a restructuring plan that governments deem acceptable, Chrysler will likely be forced to file for bankruptcy protection or even liquidate its assets.
The UAW announced its deal in a news release Sunday night, calling the concessions painful but saying the deal takes advantage of the Obama administration giving Chrysler and its workers a second chance.
The administration in February rejected Chrysler’s restructuring plan and said it could not stand on its own. The government gave the automaker until April 30 to make further cuts and ink a deal with Fiat.
The UAW deal is seen as a key piece of pulling Chrysler’s plan together, and it’s noteworthy that the UAW said Fiat was involved in the deal.
Chrysler Canada employs about 10,000 hourly workers and 1,000 white collar employees at its assembly plants in Windsor, Ont., and Brampton, Ont., and a casting plant in Toronto.